TO THE MEMBERS OF BKV INDUSTRIES LIMITED and reduced
Report on the Standalone Financial Statements
We have audited the accompanying financial statements of BKV INDUSTRIES LIMITED(the Company) which comprise the Balance Sheet as at 31st March 2015 theStatement of Profit and Loss the Cash Flow Statement for the year then ended and asummary of the significant accounting policies and other explanatory information.
Managements Responsibility for the Standalone Financial Statements
The Companys Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 (the Act) with respect to the preparation ofthese financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
Our responsibility is to express an opinion on these financial statements based on ouraudit.
We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditors judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Companyspreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances but not for the purpose ofexpressing an opinion on whether the Company has in place an adequate internal financialcontrol system over financial reporting and the operating effectiveness of such controls.An audit also includes evaluating the appropriateness of the accounting policies used andthe reasonableness of the accounting estimates made by the Companys Directors aswell as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the infonnation required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at 31stMarch 2015 and its loss and its cash flows for the year ended on that date.
Emphasis of Matters
We draw attention to the following matters in the Notes to the financial statements:
3 a) Note 36 to the financial statements which describes the uncertainty related tothe outcome of the lawsuit filed relating to the Non- Agricultural Tax appeal by theGovernment/farms.
b) Note 32 in the financial statements which indicates that the Company has accumulatedlosses and its net worth has been substantially eroded the Company has incurred a netloss during the current year and a marginal profit due to exceptional items in theprevious year(s) and the Companys current liabilities exceeded its current assetsas at the balance sheet date. These conditions indicate the existence of a materialuncertainty that may cast significant doubt about the Companys ability to continueas a going concern. However as the Company has got consistant operating lease income theaccounts have been drawn up on going concern basis.
Our opinion is not modified in respect of these matters.
Report on Other Legal and Regulatory Requirements
As required by the Companies (Auditors Report) Order 2015 issued by the CentralGovernment of India in term of sub-section (11) of section 143 of the Companies Act2013we give in the Annexure a statement on the matters specified in the paragraphs 3 and 4 ofthe Order to the extent applicable.
As required by Section 143 (3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
(e) The going concern matter described in sub-paragraph (b) under the Emphasis ofMatters paragraph above in our opinion may have an effect on the functioning of theCompany.
(f) On the basis of the written representations received from the directors as on 31stMarch 2015 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2015 from being appointed as a director in terms of Section164 (2) of the Act.
(g) With respect to the other matters to be included in the Auditors Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 26 to the financial statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any and the Company did not have anylong-term contracts including derivative contracts for which there were any materialforeseeable losses.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
For Garlapati & Co
Firm Regn. No. 000892S
Partner M.No: 022101
Date: 29th May 2015
Annexure to the Auditors' Report
The Annexure referred to in our report to the members of BKV Industries Limited(the Company) for the year Ended on 31st March 2015. We reportthat:
1) In respect of Fixed Assets
a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information.
b) We have been informed that all the fixed assets have been physically verified by themanagement during the year and to the best of our knowledge no serious discrepancies havebeen noticed on such verification.
2) The company has given its farm on long term lease and carrying on no otheroperations hence no inventory is maintained by the company hence the question ofphysical verification of inventory in the reasonable intervals does not arise and hencethe clause is not applicable.
3) The company has not granted any loans to companies firms or other parties listed inthe register maintained under section 189 of the Companies Act 2013. Accordinglysub-clauses (a) and (b) of this order are not applicable.
4) In our opinion and according to the information and explanations given to us thereare adequate internal control system commensurate with the size of the company and thenature of its business with regard to the purchases of inventory fixed assets and for thesale of goods and services. During the course of audit we have not observed anycontinuing failure to correct major weakness in internal control system.
5) According to the information and explanations given to us the company has notaccepted any fixed deposits from the public within the meaning of section 73 to 76 of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014. Further noOrder has been passed by Company Law Board or National Company Law Tribunal or ReserveBank of India or any court or any other tribunal. Hence the provisions of this are notapplicable.
6) We have broadly reviewed the cost records maintained by the Company pursuant to theCompanies (Cost Accounting Records) Rules 2011 prescribed by the Central Government underSection 148(1) of the Companies Act 2013 and are of the opinion that prima facie theprescribed cost records have been maintained. We have however not made a detailedexamination of the cost records with a view to determine whether they are accurate orcomplete.
7) a) According to the information and explanations given to us in our opinion thecompany is regular in depositing undisputed statutory dues Income-tax Sales Tax WealthTax Service Tax Customs Duty Excise Duty Cess and other material statutory duesapplicable to it. According to information and explanations given to us and the opinionsought by the management the Provident Fund and ESI are not applicable to this company.According to the information and explanations given to us no undisputed amounts payablein respect of Income-tax Sales Tax Wealth Tax Service Tax P.F and ESI Customs DutyExcise Duty and Cess were in arrears as at 31st March 2015 for a period of more thansix months from the date they became payable.
b) According to the information and explanations given to us there are no dues ofSales Tax. Income-Tax Customs Duty Wealth Tax Excise Service Tax Duty which have notbeen deposited on account of dispute and in the case of levy of Non-Agricultural LandsAssessment under Andhra Pradesh Non-Agricultural Land Assessment Act the matter ispending before courts and an amount of Rs. 59.07 lakhs is shown under contingentliability.
c) The amounts due to Investor Education & Protection Fund for a period exceedingsix months as at 31s' Match 2015 does not arise as the company has notdeclared dividends to the shareholders since its inception. Hence this sub-clause is notapplicable.
8) The Company has accumulated losses to the extent of Rs. 342.75 lakhs and the Companyreported a cash profit of Rs. 0.69 lakhs during the financial year 2014-15 and made a cashprofit of Rs. 1.76 lakhs during the financial year 2013-14.
9) The company has no loans from banks or financial institutions nor issued debenturesduring the year hence in our opinion and according to the information and explanationsgiven to us this clause is not applicable to the company.
10) In our opinion and according to the explanations given to us the company has notgiven any guarantees for loans taken by others from bank and financial institutions.Hence this clause is not applicable to the company.
11) In our opinion and according to information and explanations given to us thecompany has not raised any term loans during the year. Hence this clause is notapplicable to the company.
12) Based on the audit procedures performed for the purposes of reporting the true andfair view of the financial statements and as per the information and explanations given bythe management we report that no fraud on or by the company has been noticed or reportedduring the course of our audit.
For Garlapati & Co
Firm Regn. No. 000892S
G. Satyanarayana Partner
Date : 29th May 2015